Direct Energy - Controversies

Controversies

March 2012 - Direct Energy tried to impose new contract terms on 500,000 rental water heater customers through negative option marketing leading to a public apology and rollback of its plan last March 15, 2012.

Direct Energy was fined C$157,500 in 2003 after investigators discovered 21 forged contracts trapping customers into long-term energy deals. According to Paul Massara, then the president of the company, the forgeries took place between June 2001 and April 2002. Both Direct Energy and a company it acquired, Energy America were charged with employing unethical business practices, with Energy America being fined over $500,000 in penalties for enrolling customers without permission and using deceptive sales pitches. The companies were found to have used unethical business practices in Michigan, Georgia, Texas, Ontario and Manitoba. The Ontario government has since passed a bill that would require energy retailers to follow up on each contract sold to ensure the customer had willingly made the purchase.

During the investigations, the company frustrated investigators by withholding and concealing evidence, failing to respond to complaints, failing to respond to subpoenas for court appearances and generally ignoring demands to comply with the investigation. The U.S. branch of the company was taken to court by a customer in 2002. The judge in the case removed himself after being solicited for a contract by Energy America, citing a concern that he was now a potential witness in the case. Before the hearing could be re-scheduled, the complainant settled out of court with the company on the condition that he no longer discuss the case publicly.